Instructions Chart of Accounts General Journal Income Statement Balance Sheet Instructions Southeast Bank invests in equity securities and prepares quarterly financial statements. At the beginning of the fourth quarter of 2019, the bank held as an investment in equity securities 280 shares of Eglan Company common stock that originally cost $7,280. At that time, these securities had a fair value of $7,000. During the fourth quarter, the bank engaged in the following transactions: Oct. 26 Nov. 26 Dec. 10 Purchased 360 shares of Farrell Company common stock for $39 per share. Sold 280 shares of Eglan common stock for $24 per share. Purchased 360 shares of Gray Company common stock for $41 per share. On December 31, 2019, the quoted market prices of the shares were as follows: Eglan Company, $51 per share; Farrell Company, $42 per share; and Gray Company, $39. per share. Required: 1. Prepare journal entries to record the preceding information for the fourth quarter. 2. Show what the bank reports on its fourth quarter 2019 income statement for these equity securities. 3. Show how the bank reports this investment in equity securities on its balance sheet at the end of the fourth quarter of 2019. 4. Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses for trading securities?
Instructions Chart of Accounts General Journal Income Statement Balance Sheet Instructions Southeast Bank invests in equity securities and prepares quarterly financial statements. At the beginning of the fourth quarter of 2019, the bank held as an investment in equity securities 280 shares of Eglan Company common stock that originally cost $7,280. At that time, these securities had a fair value of $7,000. During the fourth quarter, the bank engaged in the following transactions: Oct. 26 Nov. 26 Dec. 10 Purchased 360 shares of Farrell Company common stock for $39 per share. Sold 280 shares of Eglan common stock for $24 per share. Purchased 360 shares of Gray Company common stock for $41 per share. On December 31, 2019, the quoted market prices of the shares were as follows: Eglan Company, $51 per share; Farrell Company, $42 per share; and Gray Company, $39. per share. Required: 1. Prepare journal entries to record the preceding information for the fourth quarter. 2. Show what the bank reports on its fourth quarter 2019 income statement for these equity securities. 3. Show how the bank reports this investment in equity securities on its balance sheet at the end of the fourth quarter of 2019. 4. Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses for trading securities?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Qw.30.
Transcribed Image Text:Instructions Chart of Accounts General Journal Income Statement Balance Sheet
Instructions
Southeast Bank invests in equity securities and prepares quarterly financial statements. At the beginning of the fourth quarter of 2019, the bank held as an investment in
equity securities 280 shares of Eglan Company common stock that originally cost $7,280. At that time, these securities had a fair value of $7,000. During the fourth quarter,
the bank engaged in the following transactions:
Oct. 26
Nov. 26
Dec. 10
Purchased 360 shares of Farrell Company common stock for $39 per share.
Sold 280 shares of Eglan common stock for $24 per share.
Purchased 360 shares of Gray Company common stock for $41 per share.
On December 31, 2019, the quoted market prices of the shares were as follows: Eglan Company, $51 per share; Farrell Company, $42 per share; and Gray Company, $39
per share.
Required:
1. Prepare journal entries to record the preceding information for the fourth quarter.
2. Show what the bank reports on its fourth quarter 2019 income statement for these equity securities.
3. Show how the bank reports this investment in equity securities on its balance sheet at the end of the fourth quarter of 2019.
4. Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses for trading securities?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education